Mathematical Models with Applications
Entrepreneurship: Keeping Score with Mathematics
Unit IV: Student Business Project
Teacher Notes, Student Activities, and Transparencies
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Unit IV: Student Business Project
Section 1: Creating and Refining the Idea
Teacher Notes
Section 1: Creating and Refining the Idea
Teacher Notes
Overview:
Creativity is an important aspect of every individual and, particularly, of an entrepreneur. A
person’s latent creativity can be stifled by perceptual, cultural, emotional, and organizational
factors. Creativity can be unlocked, and creative ideas developed and refined, by using any one
of several creative problem-solving techniques. In this section, students will use one or more
problem-solving techniques to refine a product or service idea, develop a product or service
name, and develop a company name. The project requirements will be described.
Goal:
The goal of this section is for students to brainstorm business ideas, form a group, and assign
group roles. Students will engage in creative problem-solving activities using a variety of
methods to refine their product ideas. Students will understand the project requirements for
developing a business idea.
TEKS Addressed:
Although the work done in this first section is not mathematical in context, the critical thinking
skills used support mathematical thinking.
Materials:
Copy of vocabulary handout (1 per student)
Team formation activity sheet
Creating and Refining the Idea Activity Sheet
Project Requirements
Project Scoring Guide
Procedures:
Student Activity 1: Team Formation
Have the students write a brief description of their idea for a product or service on a sheet of
paper. Arrange students in a large circle around the room so that everyone can be seen, and ask
them to hold up their sheets of paper. Have students group themselves around an idea they are
interested in using to create a business. These groups will develop and sell this idea. Groups
should consist of 3–4 students. If more students like one idea, allow more than one team to work
on a particular idea. These teams will work together for the remainder of this module to continue
developing their business ideas.
If a group is having trouble finding an idea, here are some possibilities: making cute dog tags,
dog walking, providing delivery service for the elderly, designing T-shirts, selling roses in
restaurants, selling items in a mall—such as flowers, babysitting services, and lawn services.
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Unit IV: Student Business Project
Section 1: Creating and Refining the Idea
Teacher Notes
1. Have students sit with their teams and organize themselves in a businesslike form with team
roles. Go over the team roles as listed on the activity sheet. Make sure students understand
that all students in the team are responsible for working on all components. The persons
assigned specific roles are responsible for managing their particular area and should delegate
work. All teams need to have the first three jobs filled. If teams have a fourth member, the
graphic designer role may be filled. All members of the team will be involved in
mathematical analysis and financial reports, so no treasurer or accountant should be named.
Teams should fill in the names of the students filling the various roles.
2. Teams should write a brief initial description of their product or service idea. These ideas
will be further refined during the next activity.
Student Activity 2: Creating and Refining the Idea
1. Ask students to sit with their team. Give each student a copy of the vocabulary list. Describe
and discuss with the class each of the problem-solving techniques listed in the vocabulary
handout.
2. Have teams choose from attribute listing, checklist, or forced relationships to refine their
idea. Give the teams 10–15 minutes to go through the method of their choice.
3. Have the teams use a different method to come up with a product/service name. The teams
can choose from brainstorming, the big dream approach (from Unit II, Section 1), or free
association.
4. Ask the teams to use a third method to come up with a company name. They may choose
any method that they have not yet used.
Student Activity 3: Project Requirements
1. The project requirements for each group’s presentation to the class are given. The teacher
may change the list as needed. The students should present material described in Section 2
of this unit so that you can assess their understanding of the concepts. The presentation
should be given by the entire group, with the responsibilities shared.
Note: The field test teachers felt that this project would mean more to the students if the teacher
arranged for someone from the community to observe the presentations. They could also be
available to answer questions after the students have decided on a project idea. People who
might be interested in listening to these presentations include bankers and local entrepreneurs.
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Unit IV: Student Business Project
Section 1: Creating and Refining the Idea
Student Activity
Student Activity 1
Team Formation
1. Organize your team into a business, and assign the following roles:
President – responsible for organizing the team meetings, makes sure
the team stays on task
Administrative Assistant – responsible for recording notes from team
meetings
Reporter – responsible for organizing and delegating any reports made
to the class
Graphic Designer – responsible for coordinating the presentation
materials for class reports
President - _______________________
Administrative Assistant - _______________________
Reporter - ________________________
Graphic Designer - _________________________
1. Write a brief, initial description of your product or service idea.
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Unit IV: Student Business Project
Section 1: Creating and Refining the Idea
Student Activity
Creative Problem-Solving Techniques
Vocabulary Handout
Attribute Listing – Attribute listing is an idea-finding technique requiring the
entrepreneur(s) to list the attributes of an item or problem and then look
at each from a variety of viewpoints. Looking at the positives and the
negatives helps the entrepreneur develops a new idea. Through this
process, originally unrelated objects can be brought together to form a
new combination of possible new uses that better satisfy a need.
Checklist – With the checklist method, a new idea is developed through a
list of related issues or suggestions. The entrepreneur(s) can use a list
of questions or statements to guide the direction of developing entirely
new ideas or concentrating on specific “idea” areas. One general
checklist is:
• Put to other uses? New ways to use as is? Other uses if modified?
• Adapt? What else is like this? What other ideas does this suggest?
Does past offer parallel? What could I copy? Whom could I
emulate?
• Modify? New twist? Change meaning, color, motion, odor, form,
shape? Other changes?
• Magnify? What to add? More time? Greater frequency? Stronger?
Larger? Thicker? Extra value? Plus ingredient? Duplicate?
Multiply? Exaggerate?
• Minify? What substitute? Smaller? Condensed? Miniature? Lower?
Shorter? Lighter? Omit? Streamline? Split up? Understated?
• Substitute? Who else instead? What else instead? Other
ingredient? Other material? Other process? Other power? Other
place? Other approach? Other tone of voice?
• Rearrange? Interchange components? Other pattern? Other
layout? Other sequence? Transpose cause and effect? Change
pact? Change schedule?
• Combine? How about a blend, an assortment, an ensemble?
Combine units? Combine purposes? Combine appeals? Combine
ideas?
Forced Relationships – Forced relationships, as the name implies, is a
method that tries to force relationships among some product
combinations. It is a technique that asks questions about objects or
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Unit IV: Student Business Project
Section 1: Creating and Refining the Idea
Student Activity
ideas in an effort to develop a new idea. The new combination and
eventual concept is developed through a five-step process:
1. Isolate the elements of the problem.
2. Find the relationships between these elements.
3. Record the relationships in an orderly form.
4. Analyze the resulting relationships to find ideas or patterns.
5. Develop new ideas from these patterns.
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Unit IV: Student Business Project
Section 1: Creating and Refining the Idea
Student Activity
Below is an illustration of this technique with paper and soap.
Elements: Paper and Soap
Forms
Relationship/Combination Idea/Pattern
Adjective
Papery soap
Flakes
Soapy paper
Wash and dry travel aid
Noun
Paper soaps
Tough paper soaked
with soap and usable
for washing surfaces
Verb-correlates Soaped papers
Booklets of soap
Soap “wets” paper
leaves
Soap “cleans” paper
In coating process
Suggests wallpaper
cleaner
Brainstorming – The brainstorming method for generating new product or
service ideas is based on the fact that people can be stimulated to
greater creativity by meeting with others and participating in organized
group experiences. Although most of the ideas generated from the
group have no basis for further development, often a good idea
emerges. When using this method, the following four rules should be
followed:
1. No criticism is allowed by anyone in the group; no negative
comments.
2. Freewheeling is encouraged; the wilder the idea, the better.
3. Quantity of ideas is desired; the greater the number of ideas, the
greater the likelihood of useful ideas emerging.
4. Combinations and improvement of ideas are encouraged–ideas of
others can be used to produce still another new idea.
The brainstorming session should be fun, with no one dominating or
inhibiting the discussion.
Free Association – The free association method helps the entrepreneur(s)
develop a new idea through a chain of word association. This technique
is helpful in developing an entirely new slant to a problem. First, a word
or phrase related to the problem is written down, then another and
another, with each new word attempting to add something new to the
ongoing thought processes, thereby creating a chain of ideas ending
with a new product idea emerging.
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Unit IV: Student Business Project
Section 1: Creating and Refining the Idea
Student Activity
Student Activity 2
Creating and Refining the Idea
Below are listed six different creative problem-solving techniques that your
team will use to refine your idea and develop a product or service name as
well as a company name.
Attribute Listing
Check List
Forced Relationships
Brainstorming
Free Association
Big Dream Approach
1. Choose from attribute listing, check list, or forced relationships to refine
your product or service idea.
2. Choose from brainstorming, big dream approach, or free association to
come up with a product/service name.
3. Choose from any method that you haven’t already used to come up with
a company name.
4. a. Your company name is
_______________________________________________
b. Your product or service name is
________________________________________________
c. Describe your idea in a paragraph.
d. Describe the problem-solving techniques you used and why you liked
or disliked the techniques.
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Unit IV: Student Business Project
Section 1: Creating and Refining the Idea
Student Activity
Student Activity 3
Project Requirements
Your group is to present information regarding your company, including
your survey results, financial statements, and the projections your group
made. You will make this presentation in order to get financial backing for
your company. The following is a list of requirements for your group’s
presentation.
I.
Description of the idea for your business
• Explain the business. What product or service are you selling?
• What was the original idea?
• What were some of the other ideas your group had?
• How did your group decide on the final idea?
II.
Explanation of your market research questionnaire results
• What were some of the questions on your market research
questionnaire?
• Why did your group choose these questions?
• What were the results?
• How did the results help you make decisions?
• Were you surprised by the answers to any of the questions?
III.
Explanation of Assumptions
• Who will be your customers?
• What price will you charge for your product or service?
• How did your group determine the price to charge?
• What are the main activities that will aid your company’s sales?
• What will be your expenses?
• What will you need for beginning inventory?
• How did the market research questionnaire help your group with
the assumptions?
IV.
Financials
• Present your company’s Income Statements.
• Explain your group’s One-Year Income Statement.
• Present and explain your group’s Cash Flow Statement.
• Present and explain your company’s Balance Statement.
• Present your company’s break-even analysis.
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Unit IV: Student Business Project
Section 1: Creating and Refining the Idea
Student Activity
Project Scoring Guide
Group Members ___________________________________________
Points
I.
Description of the idea for your business
• Explain the business. What product or service are you
selling?
• What was the original idea?
• What were some of the other ideas your group had?
• How did your group decide on the one idea?
II.
Explanation of your market research questionnaire results
•
•
•
•
Give a copy of the market research questionnaire.
Why did your group choose these questions?
Presentation of the results of the market research
questionnaire via graphs and/or tables
Explain your reactions to the results of the market research
questionnaire.
III.
Explanation of Assumptions
• Who will be your customers?
• What price will you charge for your product or service?
• How did your group determine the price to charge?
• What are the main activities that will aid your company’s
sales?
• What will be your expenses?
• What will you need for beginning inventory?
• How did the market research questionnaire help your group
with the assumption?
IV.
Financials
• Present your company’s Income Statements.
• Explain your group’s One Year Income Statement.
• Present and explain your group’s Cash Flow Statement.
• Present and explain your company’s Balance Statement.
• Present your company’s break-even analysis
NOTE: A group of students may decide that the business is not feasible
after they have done the financial analysis. They will have successfully
completed the project even if they decide their business is not going to be
financially sound.
V. Presentation
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Unit IV: Student Business Project
Section 2: Developing Your Business Idea
Teacher Notes
Section 2: Developing Your Business Idea
Teacher Notes
Overview:
The students have studied the market analysis process used for Grape Expectations. As students
define the market for their product or service, they will discuss having a representative sample
from each market segment or group. They will design a questionnaire and collect data regarding
their idea from the defined market. The teams will combine their questionnaire results, analyze
the data, and draw conclusions about the potential marketability of their product or service and
the quality of the product or service name. These results will then be portrayed graphically with
a visual display and orally. Each group should explain their inferences and the impact these
inferences made on their company design.
Goal:
The student will design a questionnaire, create graphs to represent the data collected from the
questionnaire, and analyze the data to make inferences.
TEKS Addressed:
1(A) The student is expected to compare and analyze various methods for solving a real-life
problem.
1(C) The student is expected to select a method to solve a problem, defend the method, and
justify the reasonableness of the results.
2(A) The student is expected to interpret information from various graphs, including line graphs,
bar graphs, circle graphs, histograms, and scatterplots to draw conclusions from the data.
3(A) The student is expected to formulate a meaningful question, determine the data needed to
answer the question, gather the appropriate data, analyze the data, and draw reasonable
conclusions.
3(B) The student is expected to communicate the methods used, analysis conducted, and
conclusions drawn for a data analysis project by written report, visual display, oral report, or
multi-media presentation.
3(C) The student is expected to determine the appropriateness of a model for making predictions
from a given set of data.
Materials:
Spreadsheet software (optional), graphing technology
Activity Sheets 1 , 2 and 3
Copy of the Grape Expectations Sample questionnaire (Unit II, Section 2)
Copy of the Customer Profile for Grape Expectations (Unit II, Section 2)
Review Vocabulary:
Population determination – The first step in using consumers to test the new product idea is to
define the population to be studied. All individuals, companies, or stores with a potential interest
in the product or service need to be identified and characterized. Some of these characteristics
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Unit IV: Student Business Project
Section 2: Developing Your Business Idea
Teacher Notes
might include age, sex, level of education, employment, marital status, location, or other traits
that are particular to the product or service.
Simple Random Sample – Sampling is the process of selecting a representative subset (portion)
of the population. While there are various sampling methods available, such as systematic
sampling, stratified sampling, or cluster sampling, the most commonly used method—and the
one that is easiest to use—is random sampling. In random sampling, every unit of the population
has an equal chance of being in the sample.
Questionnaire Design – The most effective way to begin is to make a list of the information that
will be needed to create a market plan. For example, the entrepreneur(s) may think there is a
market for his or her product but may not be sure who the customer will be or even whether the
product is appropriate in its present form. Thus, some objectives would be to ask people what
they think of the product or service and if they would buy it, and to collect some background
demographic and attitudes of these individuals. Other objectives may be to determine the
following:
• How much potential customers would be willing to pay for the product or service
• Where potential customers would prefer to purchase the product or service
• Where the customer would expect to hear about or learn about such a product or service
The questionnaire, or data collection device, should include questions specifically designed to
fulfill one or more of the objectives listed. Questions should be designed so that they are clear
and concise, do not bias the respondent, and are easy to answer.
Bar Graphs – A graph in which the length of the bars shows the frequency of data values
Pie Chart – A circle graph where each wedge is a percentage of the circle that represents the
percentage of the frequency of data values
Scatterplot – A graph of ordered pairs that displays the relationship between two sets of data
Mean – The mean, also called the arithmetic mean, is calculated by dividing the sum of the
values in the data set by the number of data values
Median – The middle data value in an ordered data set. When there are two middle values, the
median of the data set is the mean of these two values
Mode- The value that appears most often in a data set
Procedures:
Student Activity 1: Designing a Questionnaire
1. Discuss with students the different types of research they can do. Secondary research is
research that has been done by other people. Secondary research can save the students time.
They may do some of the research on their business in the library or on the computer. They
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Unit IV: Student Business Project
Section 2: Developing Your Business Idea
Teacher Notes
may contact other businesses or contact a trade association to get information. Primary
research is done by the group. They will conduct this research by creating a questionnaire.
2. 2) Talk with students about their market definition, matching the people they are going to
talk to with this definition, and designing good questions to use in their market research
questionnaire. The teacher needs to ensure that several questions have more than two
responses so that they will be able to create graphs to display the data collected. Show
students samples of types of questions from the handout, Sample Questions, and go through
the types of questions. Point out that the information gathered will be displayed in graphical
form in the next activity. Students should have a reason for every question they ask. The
teacher may discuss the follow questions with individual groups or with the whole class.
• What information do you want?
• How do the questions drive the data?
• To whom will you send the questionnaire?
• Questions are given to gather information. They are a laundry list you have to answer
to start your business. Whom must you ask to get this answer?
• What kinds of graphs might be used to display the data from the various types of
questions? Histograms and pie charts will be the most commonly used graphs,
especially when there are multiple-choice answers.
3. Help students think about information they may need to gather about their service or product.
4. Review the sample questionnaire for Grape Expectations. Point out that this questionnaire
meets the objectives of gathering information about type of service, the amount a consumer
would pay, and how the consumer would like to obtain the product, as well as demographic
information.
5. Have teams work on developing their questionnaire. Remind them that they should design
every question so that they can collect data from that question. Some questions may be yes
or no; other questions should be category type questions, and some should require a
numerical answer. Then have the groups work on their own results. Every questionnaire
should include questions like: Do you like this product? Would you buy this product? Do
you like the name of this product? Also make sure students include demographic
information on their market research questionnaires with questions about age, grade in
school, gender, employment, etc.
6. Once each team has designed their questionnaire, have them exchange it with another team in
the class for a peer review. The reviewers should look to see if the questionnaire is easy to
understand and unbiased (does not lead the respondent toward one answer). They should
also make suggestions about the answer choices given and possibly expand or refine the
choices.
Homework: Each student should administer his or her group’s questionnaire to at least 7 people
identified to be in the market sample.
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Unit IV: Student Business Project
Section 2: Developing Your Business Idea
Teacher Notes
Student Activity 2 : Analyzing the Data
1. Team members combine the questionnaire results and analyze data. Each question should be
modeled with a graph. The teacher may need to review different types of charts with
students. Encourage students to think about the benefits of different types of graphs. For
example, histograms show high frequencies well, pie charts give a nice visual of percentage
breakdowns, and scatterplots and line graphs show trends well. Most of the students’ market
research questions will fall into pie charts or histograms. The teams draw conclusions about
the potential success of the product or service and the market for it. They make refinements
to their idea based on the analysis of their data. Note: If the students are discouraged
because they received too many negative response, the teacher may need to assist the team in
creating a new idea from the list they created in the previous unit.
2. Once the teams have compiled all of their data, they should create a customer profile. Look
at the example given for the customer profile for Grape Expectations.
• What is a customer profile? The customer profile tells you about your typical customer
based on demographic information obtained from the questionnaire.
• How can we use the data from the questionnaire to develop a customer profile? Take the
mean value of the demographic information, such as age or grade in school.
3. Assessment: Have students display their poster presentation around the room and allow the
class to take a “gallery walk” around the room to review the other teams’ work. The team
poster can be evaluated for assessment purposes.
Student Activity 3: Determining Market Size, and Student Activity 4: Analyzing Your
Competition
1. Allow time for students to analyze the results of their questionnaires and analyze their
findings.
2. Allow time for students to research the competition.
3. Have students report to their teams the findings on their local competition.
•
How will the number of competitors affect the size of your potential market? It will
decrease the size of your market. The number of competing companies now divides your
market.
3. Teams take their local market size and divide it by the total number of competing companies.
Make sure students include their company in this number. Students should call on their
competitors to inquire about their pricing. This will help them get a sense of what prices they
might consider as they move into financial analysis in the next units.
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Unit IV: Student Business Project
Section 2: Developing Your Business Idea
•
Teacher Notes
Now that you have a potential market size, how can you determine how much money you
will make? This question is intended to get the students thinking about what financial
information they might need to consider. Things they may come up with include pricing,
expenses, and specific costs associated with their company.
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Unit IV: Student Business Project
Section 2: Developing Your Business Idea
Student Activity
Student Activity 1
Designing a Questionnaire
1. Discuss who your market is for your service or product. Describe the
individuals who would be interested in purchasing your product or
service in terms of age, gender, level of education, employment, marital
status, location, or other traits that are particular to your product or
service.
2. Make a list of objectives on which you would like to gather information.
For example:
• How much potential customers would be willing to pay for the product
or service
• Where potential customers would prefer to purchase the product or
service
• Where the customer would expect to hear about, or learn about, such
a product or service
3. Make a list of questions and possible answer choices that meet the
objectives you listed in question 2.
4. Design the questionnaire. Be sure to include at least 2 questions that
have 3 or more answer choices. Also, make sure you ask for some
demographics of the sample on your market research questionnaire,
such as age, gender, or employment.
5. Based on the characteristics described in question 1, decide as a team
how you will administer your market research questionnaire. For
example, each member of the team may want to give the questionnaire
to 3 people of each character type. Be sure that the sample your team
collects is evenly distributed among the characteristics described.
Discuss how each team member will tabulate the data so that there is
consistency among the team.
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Unit IV: Student Business Project
Section 2: Developing Your Business Idea
Student Activity
Student Activity 2
Analyzing the Data
1. Combine all of the market research questionnaire results from each
team member. Discuss and list any problems you had in administering
the questionnaire.
2. For each question, create a graphical display of the data. You may
choose from histograms, pie charts, scatterplots, or line graphs. Use at
least three different types of graphs. All of the results should be
summarized on a poster presentation.
3. Create a customer profile for your product or service.
4. Based on your market research questionnaire, what conclusions can
you draw about your product or service idea?
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Unit IV: Student Business Project
Section 2: Developing Your Business Idea
Student Activity
Student Activity 3
Determining Market Size
1. Based on the results from the questionnaire, create a matrix that
describes the number of people willing to purchase your product or
service.
2. In the matrix you developed in question 1, find the percentage of each
population subgroup that is willing to purchase your product or service.
3. Find the number of people in each age/grade category. Multiply this
number by the percentage willing to purchase your product or service.
This value projects the market size by demographic information based
on the survey results and assumptions.
4. Make a scatterplot of the local market data over the past 3–5 years.
5. Find a trend line for this data.
6. Use your trend line to predict the market size in 3 years.
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Unit IV: Student Business Project
Section 2: Developing Your Business Idea
Student Activity
Student Activity 4
Analyzing Your Competition
1. Research the number of competing companies your company will
encounter in your local area. (Use a phone directory or contact your
local Chamber of Commerce.)
2. Based on the number of competitors your company will have, cut your
local market size by the appropriate ratio. (For example, if you have 2
other competitors, you can assume your company will only draw 1/3 of
your total market size.)
3. Research the pricing used by your competitors.
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Unit IV: Student Business Project
Section 3: Developing a Financial Model for Your Business
Teacher Notes
Section 3: Developing a Financial Model for Your Business Idea
Teacher Notes
Overview:
The students develop a financial model for their business by creating statements for revenue,
income, cash flow, and a balance sheet, and a mathematical model.
Goal:
The students will use the Grape Expectations model to design financial statements to represent
their business.
TEKS addressed:
1(A) The student is expected to compare and analyze various methods for solving a real-life
problem.
1(C) The student is expected to select a method to solve a problem, defend the method, and
justify the reasonableness of the results.
3(A) The student is expected to formulate a meaningful question, determine the data needed to
answer the question, gather the appropriate data, analyze the data, and draw reasonable
conclusions.
3(B) The student is expected to communicate the methods used, analysis conducted, and
conclusions drawn for a data analysis project by written report, visual display, oral report, or
multi-media presentation.
3(C) The student is expected to determine the appropriateness of a model for making predictions
from a given set of data.
Procedures:
1. The students should work as a team to create financial statements (Activities 1-7) to represent
their business. They have created all of the financial statements for the Grape Expectations
business. However, the teacher and the student group should hold a discussion to determine
which statements the group must complete for their business. Emphasize that the purpose of
making projections based on financial statements is to make wise decisions about the
business. A group of students may decide that the business is not feasible after they have
done the financial analysis. They will have successfully completed the project even if they
decide their business is not going to be financially sound.
2. The teacher may allow the students to work at their own pace to complete the financial
analysis.
3. The presentation of the projects is the summation of the module.
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Unit IV: Student Business Project
Section 3: Developing a Financial Model for Your Business
Student Activity
Student Activity 1
Assumption Statement
Group Members _____________________________________
Company Name _____________________________________
Comment: “Costs” become
part of the product.
“Expenses” are what you
spend to make the product or
run the company.
Costs: List the “per unit costs”
$
$
$
Other Costs (list below, if necessary)
Total Cost for one unit
$
Expenses:
$
$
$
$
$
$
$
Total Expenses
Month
# Units x Price
$
Activities that aid sales during this month
Number of
units sold
January
February
March
April
May
June
July
August
September
October
November
December
Total amount for units of your product (or hours of service) sold in one year:
Other Assumptions:
Price of your Product or Service (per hour)
$
Monthly
Sales
$
$
$
$
$
$
$
$
$
$
$
$
$
Unit IV: Student Business Project
Section 3: Developing a Financial Model for Your Business
Student Activity
Student Activity 2
Sales Projection Table for Your Business
Group Members _____________________________________
Company Name _____________________________________
Complete the Sales Projection Table for your company. Refer to your Assumption
Statement Student Worksheet in order to determine the number of units sold each
month and price.
Revenues Jan
# of Units
Sold
x price
Total
Monthly
Revenues
Feb
Mar
Sales Projection Table
Apr May June July Aug
Sept
Oct
Nov
Dec
Year
Unit IV: Student Business Project
Section 3: Developing a Financial Model for Your Business
Student Activity
Student Activity 3
Projected Monthly Income Statement for Your Business
Group Members _____________________________________
Company Name _____________________________________________________
Projected Income Statement
Month _______________________
Gross Sales (# Units Sold x Price)
______________ x ______________ =
______________
Cost of Sales (Cost per Unit x # of Units Sold)
______________ x ______________ =
______________
Gross Profits (Gross Sales – Cost of Sales)
______________ - ______________ =
______________
Expenses
_________________________
_________________________
_________________________
_________________________
_________________________
_________________________
_________________________
_________________________
_________________________
______________
______________
______________
______________
______________
______________
______________
______________
______________
Total Expenses
______________
Net Profit (Gross Profit – Total Expenses)
______________ - ______________ =
______________
Unit IV: Student Business Project
Section 3: Developing a Financial Model for Your Business
Student Activity
Student Activity 4
Projected Yearly Income Statement for Your Business
Projected Income
Statement
Jan
Feb
Mar
Apr
May
June
July
Aug
Sept
Oct
Nov
Gross Sales
Cost of Sales
Gross Profit
Expenses
Total Expenses
Net Profit (Loss)
The Gross Sales is based on the number of units sold times the price.
The Cost of Sales is based on the cost per unit times the number of units sold.
The Gross Profit is the Gross Sales minus the Cost of Sales.
Total Expenses is the sum of all the expenses.
Net Profit is based on the Gross Profit minus the Total Expenses. A loss is denoted with parentheses.
141
Dec
Year
Unit IV: Student Business Project
Section 3: Developing a Financial Model for Your Business
Student Activity
Student Activity 5
Cash Flow Statement for Your Business
Group Members _____________________________________
_____________________________________
Company Name
Use your company’s One-Year Income Statement in order to complete the following Cash Flow Statement. There are notes following the Cash
Flow Statement describing each row.
Cash Flow Statement
Jan
Feb
Mar
Apr
May
June
July
Aug
Sept
Oct
Nov
Dec
CASH INFLOWS
Cash Sales - Collected
Other Sales
Total Cash Inflows
TOTAL CASH
OUTFLOWS
New Accounts Payable
Salaries, Wages &
Taxes
Total Cash Outflows
CASH INFLOWS
MINUS OUTFLOW
Previous Cash Balance
Ending Net Cash Flow
142
Unit IV: Student Business Project
Section 3: Developing a Financial Model for Your Business
Student Activity
Cash Sales are sales completed during the month; they are determined by multiplying the number of units sold by the price.
Other Sales are the sales made to customers on a credit basis.
New Accounts Payable are all costs, fees, and royalties associated with the product or service. This amount will vary according to the
amount of product or service sold.
Salaries, Wages & Taxes are all salaries, commissions, wages and taxes paid to employees during the month.
Previous Cash Balance is the amount of cash in the company at the end of the previous month.
Ending Net Cash Flow is the amount of cash the company has at the end of each month.
143
Unit IV: Student Business Project
Section 3: Developing a Financial Model for Your Business
Student Activity
Student Activity 6
Balance Sheet for Your Business
Group Members _____________________________________
Jan
Feb
Mar
Apr
May
Company Name___________________________
June
July
Aug
Sept
Oct
Nov
Dec
Year
Balance Sheet
Current Assets
Cash
Other Assets
Total Assets
Current Liabilities
Accounts Payable
Other Liabilities
Total Liabilities
_
Total Equity
Contributed Capital
Retained Earnings
Total Shareholders' Equity
Total Liabilities & Equity
Does the Balance Sheet
balance?
144
Unit IV: Student Business Project
Section 3: Developing a Financial Model for Your Business
Student Activity
Student Activity 7
A Mathematical Model
Group Members
______________________________________________
Company Name
_______________________________________________
Answer the following questions in order to help you make a
mathematical model of sales and expenses for your company.
1. What does it cost your company to sell 1 unit or provide 1 hour of
service?
2. What are the company’s other expenses per year?
3. Write a mathematical function that models the expense of
producing 1 unit or 1 hour of service.
4. What is the price per unit for your product or per hour for your
service?
145
Unit IV: Student Business Project
Section 3: Developing a Financial Model for Your Business
Student Activity
5. Write a function that models the sales of your product or service.
6. Choose 3 different amounts for the number of units or hours of
service sold. List them below:
a. ____________ b. ___________ c. ____________
Based on your model, determine the profit your company would
receive for each of the different amounts.
8. Based on your original model, how many units or hours of
service will your company have to sell in order to be even (not
make or lose money) for the month?
146
Unit IV: Student Business Project
Section 3: Developing a Financial Model for Your Business
Student Activity
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